The National Bank of Ukraine expects headline inflation to moderate to 44% yoy by the end of 2015 and to 12% yoy by the end of 2016, reads the Inflation Report for September 2015. 

The downward revision of the NBU's inflation projection was attributed to a relatively stable foreign exchange market and fading lagged effects of Hryvnia devaluation. This was also underpinned by rather tight monetary policy, declining world food and other commodity price and weak economic activity.

At the same time, the economic downturn is expected to ease by the end of 2015. According to the NBU’s estimates, the decline in real GDP moderated  in annual terms. Seasonally adjusted real GDP increased by 1% qoq. Both indicators were in the negative territory in Q2 2015.  These developments were primarily attributed to the freezing of the military conflict  in Donbas, which resulted in the start of infrastructure and production links recovery and enterprises capacity increase.

The decline in economic activity for the whole 2015 will stand at 11.6%. The downward revision was due to the absence of a significant   progress in restoring control over ATO area, a more significant  worsening of Ukraine’s  terms of trade over the forecast period compared with our previous forecast, a deeper  decline in exports to Russia and tighter fiscal and monetary policies. Real GDP is projected to resume growth as early as in 2016 and reach 2.4% yoy.

The Inflation Report is a key comprehensive analytical monetary policy document produced by central banks.  The National Bank of Ukraine publishes the Inflation Report on a quarterly basis, starting from April 2015.

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